A DUBIOUS advertising tender awarded by Africa’s largest pension fund, the Government Employees Pension Fund, to a small Johannesburg company called MojoMotherRussia for R531,555 rocketed 40-fold to R20m through a series of “irregular” behind-the-scenes machinations.
This is one of the conclusions believed to be contained in a closely guarded forensic report by PwC, which raises questions over how the fund uses the R1-trillion that sits in its coffers as the pension contributions of more than 1.2-million government employees.
The PwC report recommended action against a number of individuals, including the head of the fund, John Oliphant, who was suspended over the scandal three weeks ago.
While some have suggested Mr Oliphant was suspended as part of a political conspiracy, the PwC report is understood to have uncovered how Mr Oliphant irregularly approved payments to MojoMotherRussia, then called MotherRussia.
Investigators evidently found multiple instances in which the fund contravened its own supply chain requirements.
Mr Oliphant on Friday refused to comment, saying he had to respect the fund’s disciplinary process. He said he had been accused of influencing the media, but would not say who had made the accusation.
The scandal dates back to July last year, when the fund decided it wanted to promote its work, and put out an advertising tender.
Three companies bid: Jupiter Drawing Room, MojoMotherRussia and Element Egoli.
The much-bigger Jupiter was booted out because it supposedly provided a copy of its tax clearance certificate rather than the original, while Element Egoli came second in the ranking to MojoMotherRussia.
The report said MotherRussia also submitted only a copy of its tax clearance certificate, but was nevertheless given the tender.
MotherRussia boss Thando Dingaan denied this on Friday, saying: “Of course we gave them the original copy, we wouldn’t have got the tender otherwise.”
Mr Dingaan said that once his company had won the tender, he arranged with the fund the creation of a contract for R2m to form a “cushion” should it be required to do further work.
He said an alternative contract had been discussed in which a clause would be included specifically to cover MotherRussia financially should further work be required. However, the new amount raised eyebrows because it was the top limit that Mr Oliphant was allowed to sign off.
Mr Dingaan said ultimately MotherRussia was paid only R600,000 by the fund for contracted work that it had delivered. Although Mr Dingaan said he had a copy of this contract, he directed Business Times to the fund to get a copy. However the GEPF said this related to the merits of the disciplinary hearing and that a response might prejudice the parties involved.
The PwC report is believed to state specifically that no contract ever existed, and that no payment should ever have been made to MotherRussia.
Mr Dingaan said that once he received the tender, he had quoted the fund R10m for media buying that he would have to outsource, and R5.8m for TV and radio production costs that would also need to be outsourced. A further R1.4-million was to be paid for overseeing the production work.
He said he had received no response from the fund over this.
The report is believed to state that the project was signed off by the fund’s former communications head Khaya Buthelezi, with the amount quoted by Mr Dingaan inflated by R1m to R11m.
An outraged Mr Buthelezi on Friday said this was “absolute nonsense”.
He said the deal with MotherRussia did not progress beyond the initial one-off projects because “it became clear that mistakes had been made by the ‘supply chain’”.
• This article was first published in Sunday Times: Business Times